Continued demand for high-end condominiums in old developments
Old condos have a lot to offer, but there are things to be aware of
There has been continued demand for used high-end condominium units in older buildings in Bangkok where prices have grown at a much slower pace than new projects. While older condominium developments offer many other advantages than more affordable prices, there are a few pitfalls for prospective buyers to weight against.
Both Thais and foreigners looking for an upmarket condominium, particularly for their own use, have a keen interest in more affordable units in old developments, aged 20 years or above. Some of these condominiums may be offered at prices as low as half of those commanded by units in newly completed buildings or under construction projects.
Asides from lower prices, what buyers like most about older buildings is spaciousness. For example, while 2-bedroom units in new condominium buildings are sized between 55 and 60 square metres of space, 2-bedroom units in many aged buildings feature 70 square metres. Old-generation condominium buildings also provide more spacious common area, more parking spaces and full recreational facilities from large swimming pools, fitness/sauna rooms and children's playground to tennis courts, which are not typically provided in many new condominium projects.
For these reasons, it comes as no surprise that it is hard to find units that are offered for sale by existing owners in several older upmarket condominium buildings, particularly those with professional management.
However, every coin has two sides. There are a number of less favourable aspects that purchasers of units in aged condominium developments may consider.
Generally, newer condominium buildings attract tenants more easily. Therefore, purchases of used units in older buildings for rental income can be challenging unless the building occupies an exceptionally prime location, with easy access to a BTS or MRT station, where leasing demand is strong.
In addition, building age issues can occur in terms of maintenance and repairs, particularly when the building is not well managed. Though it may be difficult for prospective buyers to tell if the property is managed professionally until they move in, the profile and track record of the property manager or property management firm can be used as a primary assessment criterion.
Technologies continue to evolve and keep improving and enhancing the way buildings are designed, constructed and operated, and answer the occupiers' needs.
Units in most of the old generation buildings feature large balconies that may be considered as be an inefficient use of space today. Refurbishment may help boost efficiency but those who plan to purchase and refurbish these units must check out the house regulations with the condominium juristic person. Any refurbishment involving structural changes may be prohibited in some buildings.
On the safety side, the 1992 Building Safety Control Act requires buildings with over eight floors to have sprinkler systems, heat detectors and other fire safety features such as fire escapes. Though most of the high-end condominium developments constructed before 1992 have these fire safety features, some are not equipped with sprinkler systems. The systems could be installed in buildings that are already constructed but the installation could be difficult because the systems must also be installed in each individual condominium unit.
Other technological advancements that have occurred in the last decade and are now common features in most, new high-end condominium developments include high speed lifts, more efficient waste management systems, better electricity distribution systems and also modern pool designs. These all combine to produce a range of benefits from lower maintenance costs to savings in utility consumptions.
While an upgrade plan can be implemented to keep the building up to these technological advancements, buyers who may be interested in purchasing aged condominiums should also be interested in the condominium accounts, particularly the current level of the sinking fund (saving accounts).
Availability of foreign ownership quota may change anytime when a condo unit changes hands.
The Condominium Act allows foreigners to own the maximum of 49% of the total floor area of all units in a condominium building combined. Supposing that a condominium development comprises a total 100 units of the same size, foreigners can own up to 49 units.
Generally, foreign ownership accounts for approximately 30% in existing high-end condominium buildings, and thus resale of a Thai-owned unit to a foreigner generally is not an issue. However, there are cases where Thai owners sold their units to foreign buyers without knowing the foreign ownership quota had been reached, and thus the ownership of unit could not be transferred at the Land Department. While this event could happen in both new and old condominium developments, it could be seen more often in old prime condominium developments that are exceptionally popular among foreign buyers.
To avoid any complication in this aspect the seller and buyer can ask the property manager or the condominium juristic person for the foreign freehold ratio. This is usually updated each year ahead of the annual general meeting and is the responsibility of the condominium juristic manager to maintain.
It's apparent that old-generation condominium developments in Bangkok have a number of unique advantages that continue to attract buy interest. But they also come with some disadvantages. Some of these can be looked over or rectified, and others must be weighted hard.
Published in Bangkok Post's Spectrum. Co-written by Bunthoon Damrongrak and Dexter Norville, JLL's Head of Residential and Director of Property and Asset Management respectively.
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